Nation’s top court won’t hear BP appeal

Nation’s top court won’t hear BP appeal

1of2Oily absorbent material along with containment booms are seen placed on the beach as efforts to clean the beach from effects of the Deepwater Horizon spill. So far, BP has paid some $28 billion in cleanup costs, penalties and damage claims since the April 20, 2010, spill.Photo: Joe Raedle, Staff / Getty Images

2of2This June 11, 2010, file photo shows thick oil from the BP Deepwater Horizon oil spill floating on the surface of the water, coating the marsh wetlands in Bay Jimmy near Port Sulphur, Louisiana. On Monday, the Supreme Court dashed BP’s hopes of reining in a settlement program that the company says has paid out hundreds of millions of dollars in fictitious claims to Gulf Coast residents and businesses.Photo: SAUL LOEB / SAUL LOEB / AFP/Getty Images

The U.S. Supreme Court’s refusal to hear BP’s appeal of its 2012 oil spill settlement likely will be the last word on a long legal battle over who can get paid for damages stemming from the Deepwater Horizon disaster.

The decision Monday dashed BP’s hopes of reining in a settlement program that the company says has paid out hundreds of millions of dollars in fictitious claims to Gulf Coast residents and businesses. It’s a disheartening development for the company as it faces the last phase of the massive civil trial next month over the 2010 Gulf of Mexico oil spill.

It follows weeks of shareholder angst over plummeting oil prices and concern over its stake in Russia’s state-owned Rosneft and lingering liabilities from the oil spill. Investors have knocked off nearly $24 billion from BP’s stock market value in the past three months.

The entire oil-production industry is feeling pressure as crude prices sink, but with low oil prices threatening Russia’s economy and unknown oil spill costs still ahead, BP is dealing with more problems than most other companies at the moment, said Fadel Gheit, an analyst with Oppenheimer & Co.

For BP, “it’s like a mine field,” Gheit said. “If you make the wrong step, you’ll blow off your foot.”

So far, BP has paid some $28 billion in cleanup costs, penalties and damage claims since the April 20, 2010, spill. In a worst-case scenario, the company could face at least another $31 billion in federal pollution fines, settlement costs, losses from shareholder lawsuits and other costs, according to data compiled by Bloomberg.

The biggest part of BP’s upcoming spill costs could be the Clean Water Act. U.S. District Judge Carl Barbier had ruled in September that BP had acted with gross negligence in the lead-up to the spill, triggering the highest possible pollution fines of $4,300 a barrel under Environmental Protection Agency rules.

The company’s pollution fines could rise to as much as $18 billion if a federal judge in New Orleans sides with federal prosecutors on how much oil spilled into the Gulf during the 87 days after the subsea blowout at BP’s Macondo well. The judge could rule on that at any time. The explosion killed 11 workers, and millions of barrels of oil spilled into the ocean.

On Monday, the Supreme Court’s decision erased any hope BP had of finding a legal answer to what it sees as at least $600 million in fictitious — and already paid — damage claims, as well as future illegitimate claims.

BP had lost two bids with a federal district court and an appeals court to toss or alter the settlement. It then appealed to the Supreme Court in August, one of a number of efforts to stem the flow of payouts, including unsuccessful attempts to claw back certain damage awards and to oust the man who runs the settlement program, Louisiana attorney Patrick Juneau.

The London oil giant’s plight had drawn support in court papers from the British government, the U.S. Chamber of Commerce and others as BP argued that Juneau was misinterpreting the accord and paying claimants who couldn’t trace their financial losses to the spill.

In an emailed statement, BP spokesman Geoff Morrell said the company remains “concerned that the program has made awards to claimants that suffered no injury from the spill — and that the lawyers for these claimants have unjustly profited as a result.”

“On behalf of all our stakeholders, we will therefore continue to advocate for the investigation of suspicious or implausible claims and to fight fraud where it is uncovered,” Morrell said.

Plaintiff attorneys have argued that BP agreed to a deal that determines a claim is legitimate through certain tests, including if claimants resided in certain geographic zones and had financial losses. The pact does not require them to prove the losses were caused by the spill.

“The Supreme Court held — as had the lower courts — that BP must stand by its word and honor its contract,” Stephen Herman and James Roy, co-lead attorneys representing claimants, said in a written statement Monday.

The Supreme Court’s decision clears the way for the New Orleans claims office that runs BP’s multibillion-dollar settlement program to untangle a backlog of claims from thousands of Gulf Coast residents and businesses, a process that plaintiffs’ attorneys and other observers say had stalled or slowed for the better part of the last year and a half.

The claims office has paid out more than $4 billion in damages so far.

Juneau, the claims administrator, said the Supreme Court’s decision also will allow the claims office to call for all claims to be filed by a deadline six months from now.